Gardner v. Allstate Indem. Co.

147 F. Supp. 2d 1257, 2001 U.S. Dist. LEXIS 8560, 2001 WL 705715
CourtDistrict Court, M.D. Alabama
DecidedMay 15, 2001
DocketCIV. A. 98-D-480-N
StatusPublished
Cited by5 cases

This text of 147 F. Supp. 2d 1257 (Gardner v. Allstate Indem. Co.) is published on Counsel Stack Legal Research, covering District Court, M.D. Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Gardner v. Allstate Indem. Co., 147 F. Supp. 2d 1257, 2001 U.S. Dist. LEXIS 8560, 2001 WL 705715 (M.D. Ala. 2001).

Opinion

MEMORANDUM OPINION AND ORDER

DE MENT, District Judge.

Before the court is a dispute over whether to award Plaintiffs 1 their expenses incurred as a result of Defendants’ 2 erroneous removal and the subsequent remand of this case to Alabama state court. The parties briefed their respective positions on February 26, 2001. Defendants issued a Response on March 7, Plaintiffs filed a Reply on March 13, and Defendants issued a Sur-Reply on March 23. After careful consideration of the arguments of counsel,- the relevant law, and the record as a whole, the court finds that an award of attorney’s fees and costs in the amount of $31,306.52 is due to be entered.

I. JURISDICTION AND VENUE

The court retains the power to award expenses associated with the remand of this case, pursuant to 28 U.S.C. § 1447(c). See Montgomery & Larmoyeux v. Philip Morris, 19 F.Supp.2d 1334, 1336-37 (S.D.Fla.1998). The parties do not contest personal jurisdiction or venue.

II. STANDARD OF REVIEW

“An order remanding [a] case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal.” 28 U.S.C. § 1447(c).

Prior to the Judicial Improvements and Access to Justice Act of 1988, courts normally focused on the presence or absence of good faith by the removing party when determining whether to tax costs and expenses. See Judson v. Nissan Motor Co., 52 F.Supp.2d 1352, 1363 (M.D.Ala.1999) 3 Presently, section 1447(c) makes' no reference to the reasonableness of the removing party’s actions. Rather, courts today must focus strictly on the existence of federal subject matter jurisdiction. See Gray v. New York Life Ins. Co., 906 F.Supp. 628, 637 (N.D.Ala.1995).

At least two reasons dictate this statutory construction. First, Rule 11 already allows for sanctions for bad faith. Section 1447(c) and the Federal Rules of Civil Procedure both advance Congress’s power to supervise the judiciary, and separate statutes should not be read as duplicative. See Erlenbaugh v. United States, 409 U.S. 239, 243-44, 93 S.Ct. 477, 34 L.Ed.2d 446 (1972). Second, the 1988 amendment deleted the requirement that the case must have been “removed improvidently,” but did not insert the term “bad faith,” as a condition precedent to any award. Thus, “[w]e must, at least in the absence of strong and convincing evidence to the contrary, consider such sharply different wording to have been a deliberate choice by Congress.” Morgan Guar. Trust Co. of N. Y. v. Republic of Palau, 971 F.2d 917, 923 (2d Cir.1992), aff'g 767 F.Supp. 561 (S.D.N.Y.1991).

The issue, therefore, is whether an award would further “overall fairness given the nature of the case, the circumstances of the remand, and the effect on the parties.” Morgan, 767 F.Supp. at 563, aff'd, 971 F.2d 917. To be sure, a court may hesitate to tax a removing party that has acted reasonably. For example, this *1260 court has typically declined to award fees in fraudulent joinder cases unless the removing party’s actions were unreasonable, or federal jurisdiction was patently lacking at the time of removal. See Grace v. Interstate Life & Acc. Ins. Co., 916 F.Supp. 1185, 1192 (M.D.Ala.1996) (noting how it is often “far from a simple determination’! whether a party has been fraudulently joined). But Congress has not limited the court’s discretion in the first instance.

III. FINDINGS OF FACT

Tania Gardner is a named plaintiff in this class action. She purchased auto insurance from Allstate in August 1997. The policy provided that Allstate would pay the “actual cash value of the property” at the time of loss. Two months later, Gardner got in a wreck. She filed a claim with Allstate, and the company determined that her vehicle was a total loss. Allstate offered to settle the claim for one amount, Gardner rejected the offer, and she brought suit in state court in April 1998.

In her Complaint, Gardner proposed to represent a class of Alabama residents who were wronged by Allstate’s system for paying its insureds. The system allegedly undervalued the automobiles and, therefore, breached the contractual provisions requiring payment of “actual cash value.” Plaintiffs brought only two state law claims: breach of contract and unjust enrichment. Plaintiffs expressly disclaimed punitive damages and limited their damages to $74,500 per putative class member, exclusive of interests and costs. 4

Allstate removed in April 1998, claiming diversity of citizenship with the amount in controversy exceeding $75,000. At that time, Allstate’s attorneys knew or should have known that this court lacked jurisdiction, but they removed anyway, almost certainly because they perceived certain tactical advantages from evading the state court’s jurisdiction. Moreover, after removal, Allstate’s attorneys filed briefs in another class action pending before the Eleventh Circuit that was likely to further confirm the absence of jurisdiction, but they never informed Plaintiffs or the court of such developments. 5 Nor did they request a stay of this case in the meantime. Hence, this court certified Plaintiffs’ class, after Plaintiffs amended their complaint to include new tort claims and a prayer for punitive damages. The Eleventh Circuit summarily denied Allstate’s Rule 23(f) appeal.

Throughout this case, Allstate engaged in tactics designed to frustrate orderly progress or run up Plaintiffs’ litigation costs. One of Allstate’s more egregious acts was waiting until October 11, 2000 to inform Plaintiffs of its decision to move to dismiss this case for lack of jurisdiction. Allstate probably delayed because Plaintiffs’ attorneys had to mail notice to the class on October 13, and Allstate’s attorneys wanted to put Plaintiffs in the precarious position of either missing the deadline, wasting money by meeting the deadline, or seeking an extension that would further prolong this matter. 6

*1261 Unsatisfied with this court’s rulings on various matters, Allstate totally disavowed its removal theory and moved to remand on October 13. Allstate now argued that the court lacked jurisdiction because Plaintiffs could not satisfy the “amount in controversy” requirements of 28 U.S.C. § 1332.

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Bluebook (online)
147 F. Supp. 2d 1257, 2001 U.S. Dist. LEXIS 8560, 2001 WL 705715, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gardner-v-allstate-indem-co-almd-2001.